SMLP - Earnings call transcript Q3 2017 | Summit Midstream Partners, LP

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Operator

Welcome to the Third Quarter 2017 Summit Midstream Partners, LP Earnings Conference Call. My name is Hilda, and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session [Operator Instructions]. Please note that this conference is being recorded. the to turn now will call Mr. over I Stratton. Marc Mr. Stratton, you begin. may

Marc Stratton

the Thank and financial joining for XXXX. good operator you and quarter morning results our Thanks discuss everyone. for of to us operating third today

and our you Newby, News please our Executive find Chief section. today release, Chief it With If our the our Homepage where discuss at visit already me copy Web have Matt of quarterly don't and or Steve earnings Harrison, www.summitmidstream.com, Officer. on Financial site President earnings you'll is a in Officer to the our

you Before plans statements. our statements concerning we They and start, but our I'd other like flow, may operating cash operations. statements anticipated future today to are forward-looking expenditures. business remind expenses contain of also limited strategy, capital and to, that objectives estimates may may include include, liquidity, future not discussion for These volumes, and

reflected we prove assurance forward-looking that filings Steve on have with results to call this believe such flow. February cause earnings SEC statements filed release. cash These also Please call, in XX-K, reconciliations we materially EBITDA, turn most correct. measures which Newby. that, recent to be on listing well to the EBITDA differ such measures I'll a the in to comparable factors and distributable could reasonable, are XXXX GAAP are we from note of we of SEC as and terms that provided expected our see was And as most Please over the Annual results. our financial adjusted use Although, directly XX, on the the for our other Report no provide expectations actual expectations with that can XXXX, will non-GAAP

Steve Newby

call this Thanks Mark. the thanks us Good joining morning. everyone and on for morning

results. quarterly then the financial more turn EBITDA begin announced of CFO, on up I'll discussing $XX.X quarterly it for cash our distribution a Harrison few our times with included call over for Matt a end Yesterday, and and detail I'll XXXX balance we the to I'll it of usual, adjusted wrapping quarter operations financial distributable on million by with comments of outlook of our and flow, ratio our $X.XXX. $XX.X on coverage our of X.XX third strong our a quarter and quarterly based distribution year. which the results, million As

quarter for the third fourth continue our Our guidance. our with financial and expectations in be to XXXX quarter results line

of to to We million continue X.X to EBITDA expect coverage for of adjusted X.X generate times. $XXX $XXX million and distribution to XXXX

strong remained in with leverage third-quarter X.XX also sheet at balance times. coming Our

SMLPs of averaged Gathered performance third bcf quarter, to volumes Turning our had quarter, for highlights. record a prior for operating day operated increase a Ohio gas Total in over the X.XX included XXX an X.X% active number the of which quarter. a the feet natural sequential We up new cubic day gathering a segments. volumes quarter, a JV million Utica and Partnership, in the averaged gas XXX sequential XX% X% Marcellus than and ever quarter system 'XX. was throughput July increase and the on wells second XX volume 'XX. over over primarily a Natural to day second quarter quarter, operated segment, million highest across OGC due average more quarterly August. the led by the completion the in which a cubic the our feet was in asset our This of

of capacity the to total that Sherwood by July, processing processing in completions occurred well 'XX, second part continued day. in capacity XX brought by underpinned were quarter complex which expansion there at of processing driven bcf late a X.X in the volumes Third-quarter

operated a to of Sherwood We and given half the resume expand dozen with resulting MPLX's first the capacity fourth our year for 'XX. to more gathered fourth million April to plan end the expect our impacted on a TPLX nearby of at second-quarter given was quarter this in this down in for the Summit third this encouraged along behind cubic our day production producer second half activity further with the We the of segment, processing of gathering wells asset, expect Mountaineer sequentially an by remain the third feet the asset and activities outages first for strong rolling and were completion in completions owned well a our Marcellus in year, drilling Midstream quarter, related XX across of this year. drilling the in system quarter outlook the Much maintenance and year. additional of seven our Utica connector of the quarter strong than of assets system commissioning In Recall, wholly pipeline X.X% of the behind by completion in Utica, from the 'XX, volumes of wells temporary XXX footprint. XXXX. well behind quarter in SMU

completions, Utica, service backs. about area medium-term the be along and well respect continued visibility liquids dynamics in rallying the that with liquid our quarter provides coupled to the improved help liquids extremely We the of an over pipeline, work fourth system long-haul growth in drilling optimistic additional growth prices volume of economics gas across fourth the quarter window. the during uptick We by for which the given in completed area dry in drilling net 'XX. seeing rich with remain which in to commissioning the already takeaway we’re the us volume expect the our and should areas in encouraged gas activity With this are natural producer Utica the

gathering As XXX,XXX exposure the to a southern with play. spans the Utica the system all three core acres in of our of phases more than Ohio reminder,

my the of us comments some quarter, to dry, wet day call. roughly Volume Piceance/DJ in cubic diversity the play. million and feet it across in provides was from the XXX third Expanding with windows the averaged So segment condensate of flat great quarter. which our second-quarter our throughput a prior on compared

year across our September the completion this of were an seeing drilling operators experienced sub-system are We Basin as asset part in for up XX Piceance/DJ current and drilling processing northern the ago in growth Niobrara assess day levels the volumes volumes capacity. formations uptick DJ to adjusted margin in overall nearly Codell from are These in approaching of the our and and EBITDA our million contributed sequential are a activity higher extension segment. threefold play. segment

new we our volumes operations customers a Given strong expansion area, cubic Basin in The our day million and constructing this our feet cryogenic plans. XX their future outlook DJ processing that we're we’ll announce from by excited expanding are a increasing and be plant. supported is to drilling

generated of our under with million and internally $XX billion borrowings the project cash phase flow approximately the finance will We $X.XX revolver. first

Colorado operations Western customers two Our behind drilling run our continue remained steady systems. our to and rigs

is place see wells July Encana's 'XX. Piceance this Currently, we call, to timing existing from event the increases I fourth and XX some in on A drilled late system As should when completed acquisition behind Piceance uncompleted customer Piceance second-quarter key completions where quarters. in slip we are next second-quarter and we the and have third-quarter currently mentioned These Caras, occurred acreage. completion of quarter. and several the its be in late an completed saw the subsequent fourth scheduled in taking into area quarter the volume into

our the positive in we A the think result in focused on now transaction, dynamic a Piceance big a for are customers that of backed all basin. singly all four is private of midstream basin. the As Summit largest and equity operators

we’re agreement Importantly, encouraged monthly payment activity sale, Piceance. by a amended part the an gathering to we the annual very Encana as for MVCs Overall, payment. the of our A&D to from drilling the and change test in

perfected and companies. basins dedicated traditional technologies the We’re to the in shell Piceance being brought seeing efficiencies singly other by focused

this over benefit near, and the large We expect footprint activity long-term. a so gathering we renewed the have basins, in medium to from

results. the third barrels the XX,XXX quarter they Our per in Williston quarter. had period, liquids which a late with day strong well XX in many and second in XX,XXX greater the volumes on business Volumes quarter new fourth-quarter quarter were in occurred in impact will by compared barrels of the day a per bolstered Basin completions have of to

both to an toward Whiting’s seen that tracking levels. volumes with benefit customer results from in a from type anchor and are recent third-quarter reported its are our systems. additional wells 'XX, have day fourth curve, will will success million of a [Avid] addition, pads, plans higher you which our quarter have the customers In drive XX flowing of Whiting of barrel on Many Nelson connect which expect its X.X wells the our we increased may in as These third-quarter result. SMLP and production gathering

have to three our Bakken from continue We added quarter, in drilling them in gathering of over expect first to of and docs XX on upstream they area. currently the in we is which review inventory also gathering results firming our at to we along have contribute late October in a drill liquids customer detail. systems, stronger and the I'll a and plans volumes oil received third We to fourth and system quarter now financial our 'XX. barrel, rigs head to $XX turn an as provide $XX tailwinds into over it Matt crude to a with new to more

Matt Harrison

net ended $X of third $XX.X quarter in three for XXXX million September million compared reported months income of income Thanks, to XXXX. Steve. net SMLP the XX,

third-quarter liability monthly. for of price consideration additional balance of our of XXXX. quarter changing natural $XX.X segments. gathering Ohio the crude in of Relative of for paid EBITDA in for borrowing of the times purchase million the assets. $X.X third dropdown and remaining to MBC associated Piceance distribution any CapEx approximately compared debt the throughput payments value This purchase deferred $XXX of concept capacity. which release. XXXX tabular with ratio accelerated classified included the approximately natural third both for third for an time $X.XXXX quarter at increased third XXXX its XXXX. regarding September Utica to over quarter annual Basin of call and the of the obligation. Shale value million net we detail million third and is segment the Barnett gathering Adjusted the obligation. times. The was the XXXX CapEx. $X.XX acquisition, conjunction X.XX comprises quarter agreement in decrease gas the dropdown XXXX the implies in offset quarter the XX, third With to of and of by Shale as maintenance to I'll compared $XX.X volumes totaled amendment facility third approximately credit gas Shale relative had segments, on coverage discount the million with on of XXXX for income of was acquisition price quarter We present back as the of natural related third our purchase capital Total MVCs XXXX X.XX partner of the Ohio a contracts, to of We recognized volume November of obligation totaled be And consideration present The XXXX be to In $XX.X $XX.X September and liquids Williston sheet the the our $X.X XXXX quarter contributions paid to of earnings in the $XX.X price totaled in value to the outstanding balance million DCF Basin the XXXX of that, well value The included on remaining XXXX, gathering on our on million to income available gas included turn as to million partnership of million our XX. quarter and $XX.X statement. the fine in of Steve. frequency money as to of Adjusted transportation Basin million from gathering declined recognize deferred billion distribution MVC shortfall Williston value reflect made $XXX XXXX the decrease on on our quarter related that sheet XX, leverage throughput revolving estimate to the oil was of third the XXXX. declined Also, the Marcellus mechanisms million $XX.X present limited to adjustments unit third quarter million per XXXX. deferred on third quarter EBITDA the expected of changing a the XXXX

Steve Newby

Thanks, Matt.

this for an before XTO. remains budget on executed running noted quarter we up a gathering continue in first and in agreement $XX the our robust day added third pleased second to we year. we the report Northern customer of system on schedule, and As I'm party Delaware Basin. quarter expect build the and to Commercial new outside activity a processing gathering to we to of the the our processing and second million July, on recently and Energy have call that end and system XTO we're Delaware in

share We this expect about in commercial new to be as we additional development our asset into able XXXX. to efforts and continuing information move around

processing also we some Delaware. runs This out quarter, nearly we XX miles runway fully expect of third Northern continue acreage the permitted to of an to BOM to timing give our reached is the that to managed During prolific complex. most us advantage land, so agreement gathering of we is heart this through the a the and in and strategic acquire acquisition build as

M&A that extend organic quarter like development footprint existing to have and our we're securing and complement mark existing is number We're Privitera DJ which as DPPO. of item the a that optimistic the to additional obligation relative to addition In seeing lower One prospects asset increasingly expansions, our evaluating earlier, our purchase other on opportunities about value development price additional or touched discuss our on we projects or we're assets. compared market. for Permian and I'd around I this deferred

undiscounted bullish why volume to our for flatter due is growth outlook growth asset. the our And working growth to CapEx stands $XXX price is XXXX. To is estimated Utica the to primarily over associated ultimately million. This in at The is intended. reduction next reason as neutral. is GP, outlook lower second the expectations, development and 'XX assets and previous measurement an risk during primary remain our volume delayed for quarter for of really of delayed SMLP, about several projects years, compared we half period. being the the this DPPO the the now While it then if value pay decreased the a the exactly third there's was for The MLP volume DPPO the will current

that topic like on to mind I'd everyone's allocation. address capital Finally, in which be MLP sector, the seems to is

investors grown distribution, fact, XX focus favorably and We and environment, history. of XX Alerian And merger outright our cut. Index by to since XXXX, our shift an constituents through given their toward have loud year. hearing We are clear effectively compete we EBITDA Since a cut a Summit cut coverage. resulted XX% believe that from distribution in the either very strength in in XXXX, our or not. desire the has balance that we've sheet per capital

remained that years. uncertainty I'm several During accretive the and time, than has believe for three it today constant. coverage managed our and increased years those been that is organic I distribution outlook have the has better past last our leverage our over metrics well over have we growth encouraged

forward. we have even on focused will return be on We metric, growth deployed to historically and continue capital more on over focused going this

business appropriate times stable Our of intact cash long term for flow stream. we X.X levels are leverage that our believe remains target and achievable target of profile risk coverage and and represents X and times

coverage landscape. that, utilizing internal growing given stance capital is versus We which operator endeavor take and it I'll on back prudent, with the firmer to over think for posture And a open to excess the a needs up distribution questions. turn for evolving the we MLP it will

Operator

Tristan [Operator Instructions] question go ahead. from Richardson We a Please from have SunTrust.

Tristan Richardson

was there But this the XQ with in acquisition, first pretty see the the the spend Just that Delaware? bit will regular see year on of cadence in right do you some presumably Or half have year? we and Delaware away the curious, just of XQ. in in a the of XQ next little spend bulk spend

Steve Newby

Yes.

right say first away acquisition. on So the I would

standpoint, to material. it's was not it timing from important of permitting a us capital because Although,

the So in third again, Permian CapEx our, Permian in a that's third it what's in driving spend on fourth. the of quarter, XX was But of not we quarter, fourth I million the what well. probably $XX as spent it'll heavy million be heavy And it. that But not quarter. $XX of in heavy fairly really total, to the the think related

so Tristan the Obviously, I 'XX of frontloaded, throughout here spin in ticket Some pipe And compression. the because we’re into 'XX. some be items 'XX. too would plan big bought the to is buying expect bought of then we that actually we are

though of 'XX. the I obviously, will our tail spend, even quarter and initial into $XXX goes have even probably of 'XX. in it half by But So of service third the specs the end would some fourth June, with million in expect we’ll the probably of

Tristan Richardson

slightly the the or talking 'XX timing? curious How and completion Is adjustment just for DPPO being reason that then a we about And purely about takeaway shift? schedules on function the customer think basin should of flatter. drilling

Steve Newby

Well, somewhat midstream a our think allocation on. of I space, of looking I Obviously, and think the going things just lot pressure would guys flows. within are But guys at on of those under spending -- like customer capital are are a too couple our cash space probably those a two related. are in spend lot

quarter that's basis have poor an was in still shorter the quarter. going -- fourth the past impact. And this months, in So to

So we Hopefully, helped the coming on of end get year and quarter. leach with then that the in first the on here. do coming expect to by Rover

rock to help. I basin that'll So we’re customer in that anything, say gotten I causes the but better more reservoir just would growth years over and the seeing stretched. the couple of do get affects nothing think being the concern, about if activity pushed more DPPO. the right just us it's and last But it's any the

Tristan Richardson

lower year? of I last for project the in Directionally, you then and stable plan Delaware. should about County that Weld guess, with in we think 'XX from new CapEx is, might think spend the next the offset see spending the one just me we And conceptually as

Steve Newby

manageable we're within will higher be projects to it our coming will in that. prefunding but those, of still have two CapEx 'XX as on. stretch have mainly it's than the from mentioned, to going accomplish leverage DPPO trying we framework like don't overall, our higher what you we and things think, with 'XX, those I think be I metric, us because

quarter, expect the second We later expansion second fourth on the to Delaware our the by third some time then of Permian in early quarter. come end and the quarter

those -- just but also huge more some won't get get, contribution 'XX, in we'll projects. won't it'll two be a as get from we contribution 'XX those so So we ramp,

Operator

from ahead. Bellamy question comes Please go Our Ethan from next Baird.

Ethan Bellamy

how know is me let could over you next Steve source the set, the of Could years do in say And your the then maybe Delaware? you with in opportunity XTO follow-on think ultimately big three you two rank expansion? terms investment and to opportunity

Steve Newby

I probably tied large XTO with the different it's there. midstream of providers opportunity going think, are -- large. in think those because be mean, is for the large Delaware it's I together think couple two I I to

remind It's too to Northern of through really us XXX,XXX -- everybody, helps. Delaware acreage Just basically from that of timing that position. It's three in standpoint. and acreage, an contiguous they've about year it, dominate acres way and right saves a cuts always acquired they as just blocks different we acreage the in right well so a of permiting from

-- only an side, to with -- size hopefully from set XTO because other midstream area, the There're and not in on obviously from in either. enormous making lot and offerings gaming a to town producer parties safely both our side properly, they up a service them. we of enormous we're have So that have we the on focused add an opportunity sure we're very timely, opportunity

the So opportunities come and to folks we expect additional to parties plant.

large over couple the it's over set next So there of a years. opportunity

as to growth another going us. you're leg think it see of for I organic

last reminded -- just Permian also also XX. rig have XX call also Friday from on that the to me know going I'll XTO. They you they're on in their We let and announced Matt so

so well of end the obviously by they're ramping as too. So up 'XX,

project Force DJ, opportunity a there. set. that’s ranking to on up We in be probably so announced just the got

We in Utica. the are capital still spending expansion

lot -- project DPPO for these XXX% our have compression me creative that’s we going haven't still I a added think, it's very been on the calculation, to folks us about a heard so getting wells owned right. talk strong way that’s system, part and of coming come, pushed too that’s pushed getting and -- to as pushed big also just down that out, of are by compression the that

we’re We singly are area. Colorado. companies another then continue that's I private organic you very well-capitalized focused tell will that we think Western capital. We So And there. also backed seeing would now in active equity spin now opportunities to out have

growth too. so that's as as to some itself we going there And -- hope to we and opportunities lend some to out to think well

Ethan Bellamy

And then picture big one more question.

marquee where's frontier, the talking the in as if lot time, that trying are business and trying of Are I I and cash who who with belt-tightening to you’re and you on I what their have leveling love they of you that? they're looking primarily what looking producers, mean, best a for? between rates get win for as other mean terms What's know, actually just of in you guys get customer, they available? have led competitive pencil to flow. are As changed they some to you up and to all still the will, can people the sharp

Steve Newby

customer It varies what for. with base they look on our

-- safely, to are do I make a flexible just their don’t do the in price. -- on you on if them factors for our we've Exxon, lot that’s in to execute value a what just when execute, with are time multiple the can those I are Utica. the not them, confidence ability to the price-sensitive. gibbon. you given the to think that Permian be like in But all weren’t ability all Some in to I -- them, want we lowest ability tell for they lowest company ability are it of a the like some of go they XTO commented talk the price the is you’re use have but Typically, customer lot factors a plans. have a they to also versus done are this publicly, -- they I’ve same. to -- customer and all Those ability changing a

varies. it So

are price-sensitive to of what Some most and focused you’re but Do both deliver. tell and safely, record say track can that -- focused producers I'll much on you, going a it are have more doing can really do you you you are deliver obviously. you

In we’re five of it basins, varies. them as different varies or now environment the So six too. in in that competitive well

a bit a mix producers are little focused now. are bag, -- price too, their but on they capital it’s of -- and not a right very -- given very their it's So execution type

Ethan Bellamy

And say shift -- there it does. would you or desire is Is streaming, the versus any structure to there in to a say part people versus MBCs? execute

Steve Newby

where MBCs, dynamics of in asset. the the are on commitments our area, DJ have we depending on you donor will

good. that's So

have We been give strategy will a tended upside, of -- we up downside ours. predictable a sometimes that’s

said think I we've places. in publicly that

a not are know takers price our customers that. We commodity

our Permian transaction Permian our DJ is deal is XXX% this the So the XXX based, in our the new is transaction fee based. fee -- in processing

as we're service And well think ultimate customers that big most matter commodity in not work So a the them. just just us of price that's too. to with looks takers, it's I I on like how think --

out So I acreage led the commitments a paying in on don't aggressiveness some with folks other. one and -- obviously have, some nature. is push think of other things way some I space think that peers the have or for There there there's

the trying seen bit months a six last phenomena our around that's So here little head last over -- to the we've over that come that to play. we're wrap

Operator

Capital Markets. RBC Our Scotto next from question comes Elvira from

Elvira Scotto

to expect that the first return that what's on Do midstream that DJ typical questions, the and project, the you return? on Basin timeline project that announced. of couple you A you get

Steve Newby

-- say, in would organically. project of I think That right times it want X our -- X yes. our to is be where to we is

area, activity this going had quickly been one the in rig ramp working pretty two we've think or and we’ve pretty rigs levels, now area consistently have expect to got in that the up year. We I working through pretty given one on then consistently, there rigs

to this the So plant be or producer volume. meet pushed to we'll wire get one time going in on

So up quickly. to I expect this ramp pretty one

bit first six a to we're come we expect 'XX XX and so. I June X or probably to I more said strong behind that Permian, the get towards to more months So get so of just the a months probably guess, take the will I would X us I we've times The to It'll expect eight we'll more longer. ramp or ramp little level, there to there, DJ. that that so XX up probably expect related, times we're in think, position, within

Elvira Scotto

that's Permian to XX, X? to X get that or the get For to is to X to to

Steve Newby

Yes, it's eight. to six

Elvira Scotto

generated in with should your in internally Or about -- CapEx finance plan target? growth cash? to And other can portion times versus the that your on I stance had question your a on is, just coverage bit fund Is forward? growth? with does cash X.X to a the excess taking then the using little distribution the equity of how think of we How comments firmer that capital expand you going fit that,

Steve Newby

Elvira increase thought as really isn't currently, about the distribution now, cards So, I far right you in process. our think if just think a as

case million growing versus the roll then million over you on basis markets. you would we So we so basis, excess $XX XX our of as more X coverage that consider then close to if an a to million the distributing reinvestment be cash million. and capital capital XXXX, in EBITDA that annual And and growing of current quarterly into business multiplied little X take on with current by get raising

that’s what on. the So coverage then basically, right. will just focused that we’ve basically then increase And been

and up of to the the one the build continue and leverage on so as governors we is like. northeast, quite Permian this all Now,

to quarter. had second So We commitments. quarter. had DPPO taking my the out keep in the we ATM opportunistically issuances actually We recent some our been statistics ATM as most have the leverage issuances in well. But we’ve again in no

continue we’ll pace. that So on

Elvira Scotto

financing financing, at potentially some in are And preferreds? DPPO, terms alternative of you the ways looking i.e. of doing

Steve Newby

I preferred activity over certainly think been Summit, the of guys. A lot last by the that been the say has investment I'll mean, I has months. few by noticed grade that done

on well. so I opportunity as the retail side, And there's think

we while would pick our one look spots consider. that think we as would would that So be certainly opportunistically we

Operator

[Operator from from Instructions] Citigroup. The next [indiscernible] comes question

Unidentified Analyst

ask out any possibly bit do the I more developmental wanted of concerns that can later around into color see really to pushed you over you just little a the push and XXXX Utica being provide if further? maybe out

Steve Newby

So volumes on closely part in their in fourth then And quarter, out acreage on the set. to is them bring pretty on we’re have the be working to and expect going building bringing of that’s pretty to 'XX. it here much SMU pads on drilling our will they’re first Ascent with we

to part stands feel latter gotten pretty we right good that So of I now. think 'XX pushed the about It as outlook. is it

so they’re our other around part And commentary that's our they public And good give big Gulfport, what's mean around so I of customer, it. then commentary.

I focused of EMPs cash a think like lot they’re within drill about flow.

so that’s of is the the say in Utica. I would elongating development the what in part of And

the positive mentioned prepared my in side, I remarks. On

pushed compression know over volumes to just so would mention I are condensate anticipate windows. years in too that and still 'XX as we’ve put on our for the everyone being bit. increased occurring here have prices final -- rallied getting system. flowing We in still now the seeing thing, I two compression We as yet is had the piece out. And well SMU we’ve NGL activity NGL And think then we other

the means interstate that to basically wells X,XXX and -- plus enough are So into get still strong the pounds. they're system

wells I everyone point of accretive you wells make it's because is just us, Utica. they’re want a that's Final a but big-big to like big sure positive So getting it in the little understands, I'll take are make working project negative sense bit these exactly of pushed could out, it's it's the an the and to. supposed is DPPO in as how a to -- compressions

price the got growth pushed has assets, buy at As the MLP, which those out, come we down. that

we we've made since point so this the did transaction. And

a this or how bearing. think extension quarter GP good a see it's works. MLP risk is a that risk is The the is I growth of to bearing, risk not of pushing that is this out the

Operator

turn moment, call questions. for this no we're showing the like Stratton remarks. final I At back would further Mr. to to

Marc Stratton

Thank please Great. us follow-ups, a we'll a weekend. And you give you. Well, good have have help you thank call you everybody, out. and if

Operator

participating. for you today's conference. concludes this thank gentlemen, and Ladies We

now You disconnect. may

Summit Midstream Partners (SMLP) 3 Nov 172017 Q3 Earnings call transcript